Global Viewpoints

Retailers Continue to Branch Out in the UK

Edited: Jennifer Brenner
Source: CB Richard Ellis

Despite a number of prominent retailer administrations in 2008 and 2009, the number of shop branches run by multiples in the UK continues to grow, according to property consultants CB Richard Ellis (CBRE).

A major new study of expansion activity by multiples in the UK reveals that the number of convenience stores, clothing outlets and catering units in national chain networks increased respectively by 2%, 3% and just under 9% over the 2007 and 2010 period. The growth in branch numbers seen in some retail and catering sectors has however been more than offset by branch losses in service shop-uses; motor-related networks; certain small-unit food, CTN and off-licence traders and bulky goods outlets.

Branch expansion in large format stores is accelerating the migration of retail multiples to high volume trading locations, exacerbating stock obsolescence problems in secondary shop property that is no longer viable for multiple retailers’ purposes.

Mark Disney, Head of Shopping Centre Development & Leasing at CBRE comments: “The findings show underlying trends evident in the shopping centre leasing market. There is increasing polarisation in the sector with larger centres growing their market share and many retailers focusing on larger format stores. Premium shopping centres have become increasingly dominated by fashion retailers while the number of operators in many sectors of the non fashion market has contracted. Reduced supply of new space through new development is already impacting on retailers’ expansion strategies with an increased focus on opportunities in established centres leading to increased demand in those locations. Void levels in prime shopping centres have fallen sharply over the last 12 months as a result.”

“Bearing in mind that 2,000+ new retail units were delivered by developers in 2008 and 2009, the slowdown in branch growth overall explains sluggish rental performance over the last couple of years. With development activity at a low ebb and shop demand heavily skewed in favour of prime/good secondary property in dominant trading locations, occupational cost pressures for the better stock look set to grow.”

Simon Responds Positively to Shortened Extension of GGP's Exclusivity Period

Edited: Jennifer Brenner
Source: Simon Property Group, Inc.

Simon Property Group, Inc. issued the following statement in response to the Court's decision to shorten the exclusivity period requested by General Growth Properties, Inc.

"We appreciate the Court's decision to shorten the exclusivity period requested by General Growth. The Court has made it abundantly clear that General Growth must now conduct a truly fair process with all parties on a level playing field. Today we have been permitted to commence due diligence, and we will determine our best course of action as we move forward."

GGP Update: Extension for Filing Reorg Plan Approved, Shares Trading on NYSE Again

Edited: Jennifer Brenner
Source: General Growth Properties, Inc.

General Growth Properties, Inc. (GGP) had two major announcements this week. The first came as the Bankruptcy Court approved an extension of the exclusivity period during which GGP has the right to file a plan of reorganization through July 15, 2010, and an extension of the period to solicit acceptances of a plan of reorganization through September 15, 2010. During the exclusivity period, no other party is permitted to file a competing plan of reorganization.

Secondly, GGP announced that shares of its common stock will resume trading on the New York Stock Exchange (NYSE) under the ticker symbol "GGP."

“We are very pleased to again be listed on the world's largest and most liquid trading market," said Adam Metz, GGP’s CEO. "Today's listing culminates a successful week for GGP stakeholders during which we also received an important extension of the time we have to exclusively propose a plan for the company to emerge from bankruptcy. We are committed to using the time to continue to explore alternatives in order to provide fair value for our stakeholders.”

In conjunction with the NYSE listing, GGP stock has concurrently ceased trading in the over-the-counter Pink Sheet markets, where it used the ticker symbol “GGWPQ.” The seamless transition to the NYSE requires no action on the part of shareholders.

GGP currently has ownership interest in, or management responsibility for, over 200 regional shopping malls in 43 states, as well as ownership in planned community developments and commercial office buildings. The company’s portfolio totals approximately 200 million square feet of retail space and includes over 24,000 retail stores nationwide.

Pure Industrial Real Estate Trust Closes on $40M Industrial Facility

Edited: Jennifer Brenner
Source: Pure Industrial Real Estate Trust

Pure Industrial Real Estate Trust (“PIRET”) has announced the successful closing of two income producing industrial properties. The total purchase price for the two assets is $39.3 million. These off-market transactions add two industrial properties representing a total of 192,791 square feet to PIRET's portfolio.

These acquisitions increase PIRET's total gross leasable area to 986,669 square feet. The properties are located in strong industrial nodes of Calgary, Alberta and Richmond, British Columbia. The first, 234040 Wrangler Road, is a 22 acre industrial property in southeast Calgary, Alberta consisting of a state of the art crossdock and truck maintenance facility representing 125,280 square feet of leasable space. The crossdock facility features 98 truck level doors and the maintenance facility consists of 14 grade level doors. The property was acquired for $32.0 million which represents a going-in capitalization rate of approximately 7.98%. The property is leased to TransForce Administration Inc., a subsidiary of TransForce Inc. which is publicly traded on the Toronto Stock Exchange. The lease will mature in 2035. The purchase price was satisfied with cash on hand and from the proceeds of new five-year mortgage financing of $20.8 million bearing interest at a rate of 4.95% per annum.

The second, 3500 Viking Way, is a three acre light industrial property located in Richmond, British Columbia. The property was acquired for $7.3 million which represents a going-in capitalization rate of approximately 7.24%. The property was originally built in 1980, added a warehouse in 2006 to increase capacity to its current size of 67,511 square feet, and was substantially renovated and updated in 2008. PIRET funded the Viking Way acquisition with cash on hand and a new seven-year first mortgage on the property in the amount of $4,745,000, bearing interest at a rate of 5.16% per annum.

PIRET has entered into an unconditional agreement to acquire a third industrial facility located at 150 Edmonton Avenue, in Moncton New Brunswick, which is scheduled to close on March 11, 2010.

PIRET is an unincorporated, open-ended investment trust established for the purposes of acquiring, owning and operating a diversified portfolio of income-producing industrial properties in both primary and secondary markets across Canada. PIRET focuses exclusively on investing in industrial properties and is the only publicly traded vehicle in Canada that offers investors exclusive exposure to Canada's industrial asset class.

Inland Spends $424M to Buy 16 Properties from TIAA-CREF / Developers Diversified Realty JV

Edited: Jennifer Brenner
Source: Inland Real Estate Acquisitions, Inc.

Inland Real Estate Acquisitions, Inc., the purchasing arm of The Inland Real Estate Group of Companies, Inc., recently completed a $424 million acquisition of 16 shopping centers containing 3.5 million square feet, from a joint venture between TIAA-CREF and Developers Diversified Realty. The purchase was made on behalf of Inland American Real Estate Trust, Inc., a public non-traded REIT with a diversified portfolio of commercial real estate assets. The CB Richard Ellis National Retail Investment Group represented the seller.

The portfolio includes the following properties:

• Sarasota Pavilion Sarasota, FL 324,985
  
• Gateway Market Center St. Petersburg, FL 231,106
  
• Boynton Commons Boynton Beach, FL 210,488
  
• Sand Lake Commons Orlando, FL 189,721
  
• Paradise Place West Palm Beach, FL 69,620
  
• Universal Plaza Lauderhill, FL 49,505
  
• Bartow Marketplace Cartersville, GA 375,067
  
• Hiram Pavilion Hiram, GA 363,695
  
• Venture Point Duluth, GA 335,420
  
• Pleasant Hill Square Duluth, GA 282,137
  
• Stonecrest Marketplace Lithonia, GA 264,584
  
• City Crossing Warner Robins, GA 190,433
  
• Sycamore Commons Matthews, NC 265,535
  
• Gateway Plaza Jacksonville, NC 101,403
  
• Anderson Central Anderson, SC 223,211
  
• Ward’s Crossing Lynchburg, VA 80,936

“This portfolio represents the type of core retail real estate assets that play a prominent role in people’s everyday lives, and we believe that makes it an attractive investment,” said Mark Cosenza, vice president, Inland Real Estate Acquisitions, Inc. “Consumer’s today are focusing on value and convenience, and the majority of these shopping centers have strong grocery and value-based tenants, including leading retailers, like Super Wal-Mart, Publix, Kohl’s, Lowe’s, Bed Bath & Beyond, PetSmart, Staples, Dollar Tree, Marshall’s and Old Navy. We think these shopping centers will continue to perform well in all economies.”

Inland Real Estate Acquisitions, Inc. is the purchasing arm for various entities that are a part of The Inland Real Estate Group of Companies, Inc. (“Inland”) Headquartered in Oak Brook, Ill., Inland has been ranked collectively as second fastest-growing acquirer of retail property in the United States (Chain Store Age, May 2009), one of the largest shopping center owners in North America (Retail Traffic, April 2009) and one of the top managers of retail property in the United States (Retail Traffic, April 2009), and named the winner of the Torch Award for Marketplace Ethics by the Better Business Bureau of Chicago and Northern Illinois (December 2009). Inland-sponsored companies own and manage in total over 113 million square feet of diversified commercial real estate in 46 states, as well as managed assets in excess of $25.3 billion.

Herald Sells Stanley Green Retail Park, Manchester for £47M

Edited: Jennifer Brenner
Source: Henderson Global Investors

Herald Guernsey Investment Limited, a subsidiary of Henderson Global Investors’ €900 million pan-European retail property fund Herald, has exchanged contracts to sell the Stanley Green Retail Park in Wilmslow, Manchester, for £47 million to Prudential Property Investment Managers (PRUPIM) reflecting a net initial yield of 5.3%, the lowest achieved for a retail park in the current market cycle.

Stanley Green Retail Park has 91,500 sq ft of retail space and is fully let to a strong mix of national and international retail brands including TK Maxx, Next, B&Q, Halfords and Comet, with long average lease lengths.

Herald’s primary focus is on acquiring prime retail assets across France, Germany and Italy and, following this transaction and the recent acquisition of Centre Sud Shopping Centre in Le Mans, France, the fund has around €75 million of equity available to take advantage of current and future opportunities.

Commenting on the transaction, David Turner, Herald’s fund manager, said "Our strategy for the fund in 2010 is to increase our exposure to core Western European markets, including France, Germany and Italy where forecast returns remain the most attractive for our investors. Our primary focus is to hold assets for long term income, however, this opportunistic sale by Herald Guernsey Investment Limited at a market defining yield provides us with additional capital to deploy into the fund’s core markets and take advantage of current market conditions.”

Herald Guernsey Investment Limited was represented by Gerald Eve and K&L Gates and PRUPIM was represented by King Sturge, Tudor Toone and CMS Cameron McKenna LLP.

Henderson’s HERALD Fund was launched in December 2005 to acquire retail warehouses, shopping centres and city centre retail investments that offer asset management, refurbishment or development opportunities. The fund, which closed in March 2007 at over €700 million equity, has an investment focus on Eurozone countries, particularly Spain, Italy, France and Germany. The Fund now has 21 assets across 8 countries including Germany, France, Italy and Spain and is split between shopping centres (55%) and retail parks (45%).